The "cost of production" is defined as the sum of four items: (1) Cost of materials and fabrication or manipulation; (2) the usual general expenses not less than 10 percent; (3) the cost of containers and coverings and other incidental costs and charges; and (4) additions for general expenses and profit not less than 8 percent each. The "American selling price" of an article manufactued or produced in the United States is the price at which the article is freely offered for sale for domestic consumption to all purchasers. The amendments proposed by section 15 of the bill would effect the following changes in the law as above stated: (1) Eliminate the use of "foreign value" and make the "export value" the preferred method of valuation if it can be ascertained. (2) If neither "export value" nor "United States value" can be ascertained, appraisement is to be made on "comparative value" before resort is had to "cost of production," which term is changed by this section to "constructed value, a more descriptive term. (3) In determining "United States value," the actual commissions, profits, and other deductions are to be used, not arbitrarily limited amounts. (4) In determining "United States value" of new lines in which there is no previously established trade, the earliest actual sales of the merchandise undergoing appraisement or similar merchandise may be considered if made before the expiration of 90 days after importation. (5) A definition for "comparative value" is furnished which states that it is to be the equivalent of "export value" ascertained or estimated from sales or offers of other merchandise which is comparable in construction and use with the merchandise undergoing appraisement. In the case of "constructed value" the actual addition for general expenses, profit, etc., are to be used, not prescribed percentages which may exceed the actual figures. (6) The appraiser may use actual sales instead of offers in determining "export value," "United States value," or "comparative value." (7) A definition of "freely sold or offered for sale" is provided for the first time. It will permit determination of an "export value," "United States value," or "comparative value" on the basis of sales or offers which are unrestricted except for restrictions which are imposed or required by law, which limit the resale price or territory, or which are trivial with respect to the value of the merchandise to the purchaser. It will also permit the use of sales to exclusive agents and other restricted sales where such limitations do not affect the price. The present statute has been interpreted to make a "foreign value, "export value," or "United States value" unusable when the only offers made are subject to restrictions of the kinds stated. Furthermore, under the present law the price, in order to qualify, must be available to all purchasers. (8) The proposed bill goes on to provide definitions for the words “ordinary course of trade," "purchasers at wholesale,” and “such or similar merchandise." (9) It also defines "usual wholesale quantities" in such a manner as to mean the quantities in which the greatest aggregate quantity of the merchandise is sold, whereas under the present law the usual wholesale quantity is the quantity in which the largest number of individual transactions occur. (10) Certain references to the customs appraisers, and to appeals to reappraisement in the Customs Court, are eliminated for conciseness. change in the functions of appraisers or court is effected, since these are provided for elsewhere in the Tariff Act. Section 16. Signing and delivery of manifests No Section 431 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1431) requires that the master of a vessel sign the ship's manifest and other documents. At the present time, the pilot of aircraft is required to execute these documents in the absence of specific legislation applicable to aircraft. The proposed section 16 of the bill would amend section 431 to provide that the authorized agent of an air carrier may be responsible for signing and delivering the plane's manifest, instead of the pilot. Section 17. Certified invoices and entry of merchandise Section 484 (a) of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1484 (a)) provides that entry of merchandise must be made within 48 hours, exclusive of Sundays and holidays, after the arrival of the importing vessel or vehicle, unless a longer period is authorized. Section 17 (b) would amend section 484 (a) to extend this period to days. Section 484 (b) of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1484 (b)) provides that all merchandise entered shall be accompanied by an invoice certified by a United States consulate except in certain enumerated situations and further provides that the Secretary of the Treasury may grant further exceptions. Section 17 (c) would amend section 484 (b) to grant the Secretary discretion to require certified invoices with respect to such merchandise as he deems advisable and to establish terms under which merchandise may be imported without a certified invoice. Section 17 (a) of the bill would amend section 482 (a) of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1482 (a)) to correspond to the amendment proposed by section 17 (c). Section 498 (a) (1) of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1498 (a) (1)) authorizes the Secretary of the Treasury to permit informal entries up to $100 in value. Section 17 (d) of the bill would amend section 498 (a) (1) to increase the figure to $250. Section 17 (e) of the bill would add a new paragraph to section 498 of the Tariff Act of 1930 to permit informal entry of merchandise covered by paragraph 1631 of the Tariff Act of 1930 (that is, books, maps, and certain other articles imported by religious, educational, and like institutions) without regard to the ceiling in shipments of any value. The act of June 8, 1896 (U. S. C., 1946 edition, title 19, secs. 472-475), provides for special delivery and appraisement of imported articles of limited value and weight. Section 17 (f) of the bill would repeal this act, which has not been used for over 50 years. Section 18. Verification of documents Section 18 of the bill would add new material to section 486 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1486) to authorize the Secretary of the Treasury to permit by regulation all documents required in the administration of laws by the customs service to be verified by a written declaration in lieu of the oath now required by law. Section 19. Amendment of entries Section 487 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1487) permits importers to amend their entries to increase or decrease the entered value at any time before the appraisement of the merchandise. Section 19 (a) of the bill would repeal the provision for amendment of entry. Section 489 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1489), in its first 2 paragraphs, provides for an undervaluation duty of 1 percent of the final appraised value of the merchandise for each 1 percent that such final value exceeds the value as "entered" by the importer. It further provides that if the appraised value exceeds the entered value by more than 100 percent, the entry will be presumptively fraudulent, and the merchandise is to be subject to seizure and forfeiture. Section 19 (b) of the bill would repeal these provisions of section 489. Section 501 of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1501), provides that written notice of appraisement shall be furnished to the consignee, his agent, or his attorney, if (1) the appraised value is higher than the entered value, or (2) a change in the classification of the merchandise results from the appraiser's determination of value. Section 19 (c) of the bill would amend section 501 to provide that written notice shall also be given when the consignee, his agent, or attorney requests such notice in writing before appraisement, setting forth a substantial reason for requesting the notice. The amendment to section 503 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1503) proposed by section 19 (d) is made necessary by the amendments to section 489 and section 501 of the Tariff Act, as is the amendment of section 562 of the Tariff Act of 1930, as amended (U. S. Č., 1946 edition, title 19, sec. 1562), proposed by section 19 (f) of the bill. Section 20. Commingled merchandise Section 508 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1508) provides that where dutiable merchandise and merchandise which is free of duty or merchandise subject to different rates of duty are so packed together or mingled that the quantity of each class cannot be determined, the whole of such merchandise shall be subject to the highest rate of duty applicable to any part thereof, unless the importer or consignee shall segregate such merchandise at his own risk and expense under customs supervision within 10 days after entry thereof. The amendment to section 508 proposed by section 20 of the bill, would continue the application of the highest rate of duty on unsegregated commingled merchandise and enumerates the means which the customs officer may use to segregate the respective classes of commingled merchandise. The amendment would extend the period during which the segregation must be accomplished to 30 days after the date of personal delivery or mailing of written notice to the consignee that the merchandise is commingled. Furthermore, the Secretary would be authorized in his discretion to extend the period. The proposed amendment would except from the operation of this section any part of the shipment when the collector is satisfied by proof furnished by the consignee or his agent that such part is commercially negligible, is not capable of segregation without excessive cost, will not be segregated prior to its use in a manufacturing process or otherwise, and was not commingled to avoid the payment of lawful duties. Any merchandise meeting all these conditions shall be considered subject to the next lower rate of duty (including a free rate of duty) applicable to the merchandise with which it is commingled. Section 21. Correction of errors and mistakes Section 520 (c) (1) of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1520 (c) (1)), provides that notwithstanding the fact that a valid protest was not filed, the Secretary of the Treasury may authorize a collector to reliquidate an entry to correct a clerical error in any entry or liquidation which is discovered within one year after the date of entry or within 60 days after liquidation when liquidation is made more than 10 months after the date of entry. Section 21 (a) of the bill would amend section 520 (c) (1) to extend this relief provision to cover situations involving clerical errors, mistakes of fact, or any other inadvertence not amounting to an error in the construction of a law, in any entry, liquidation, appraisement, or other customs transaction, when such error, mistake, or other inadvertence is adverse to the importer and is manifest from the record or established by written evidence. Section 520 (c) (2) of the Tariff Act permits the reliquidation of an entry to correct an assessment of duty on household or personal effects which by law were not subject to duty. Section 21 (b) of the bill would amend section 520 (c) (2) to permit correction of assessments of duty on household or personal effects which are subject to duty. Section 22. Conversion of currency Section 522 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 31, sec. 372) provides that the Secretary of the Treasury shall proclaim quarterly "the values of the standards coins in circulation of the various nations of the world," based upon estimates of the Director of the Mint. It further provides that the Federal Reserve Bank of New York shall make daily certifications of commercial rates of exchange based upon market rates in New York, and that currency conversion for customs purposes shall be made in accordance with these certifications whenever the certified rates vary by 5 percent or more from the metallic rates proclaimed by the Secretary of the Treasury. Section 22 of the bill would amend section 522 to repeal the requirement that the Secretary proclaim the metallic rates. It would further amend section 522 to provide that the Secretary keep current a published list of par values which he finds are maintained by foreign countries for their respective currencies. These par values would be used whenever for customs purposes it is necessary to convert into an amount in United States currency any amount expressed in foreign currency, except when there are 1 or more rates of exchange which vary by more than 5 percent from the par value. In such a case, the list would indicate the existence of such rates and the applicable rate would be the rate certified by the Federal Reserve Bank of New York. Where no par value is maintained for any currency, the applicable rate of exchange would be the rate certified by the Federal Reserve Bank of New York. The proposed section 522 (c) provides for the certification of multiple rates of exchange where they exist and permits the application of the rate among those certified which reflects the commercial value of the foreign currency as related to the import in question. Subsections (b) and (c) of section 22 of the bill would repeal the statutory requirement that invoices state the kind of currency, "whether gold, silver, or paper." Section 23. Transfers of goods in bonded warehouse Section 557 (b) of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1557 (b)), permits the transfer of the right to withdraw goods in bonded warehouses and makes such transfers irrevocable in cases where the transferee, in the bond provided for in that section, assumes the customs obligations of the transferor with respect to the transferred merchandise. It further provides that the transferee is entitled to receive all refunds of moneys paid by him and shall have all rights to file protests under section 514 of the Tariff Act of 1930, "which would otherwise be possessed by the transferor." Judicial interpretations of section 557 (b) have conferred new rights of protest on transferees and necessitated liquidations and increased record keeping in behalf of such persons. Section 23 of the bill would amend section 557 (b) to provide that all transfers shall be irrevocable; that in the case of each transfer the transferee shall file a bond undertaking to pay all unpaid duties, taxes, charges, and exactions on the merchandise the subject of the transfer; and that a transferee shall have no right to file a protest under section 514, or to a separate liquidation in his behalf, unless the rate of duty, tax, charge, or exaction has been changed pursuant to statute or proclamation on or after the date on which the right to withdraw the merchandise was transferred to him. Section 24. Customs supervision Section 24 would add a new section to the Tariff Act of 1930 to permit the Secretary of the Treasury in his discretion to determine the degree of supervision by customs officers to be maintained with reference to activities which are required to be under direct customs supervision. Section 25. Saving clause This section is intended to maintain the status quo on rights and liabilities already accrued under acts which would be repealed or modified by the bill. Mr. ROSE. I would also like to offer at this time a tabulation which we have prepared which simply sets forth in factual form the differences between H. R. 5106 and H. R. 5505 in the form in which it passed the House in 1951. I thought that would also be of convenience to the committee. Mr. JENKINS. Yes, it will be admitted without objection at this point. (The document is as follows:) CUSTOMS SIMPLIFICATION ACT OF 1953 (H. R. 5106) The following is a comparison of H. R. 5106 with the Customs Simplification Act of 1951 (H. R. 5505, 82d Cong.), which was passed by the House of Representatives on October 15, 1951. The sections to which the sections of H. R. 5106 are compared are those of H. R. 5505, 82d Congress, as passed by the House. Section 1. Table of contents. Section 2. Repeal of obsolete accounting provisions: New. See summary explanation,1 page 16. Section 3. Effective dates of rates of duty: New. See summary explanation, page 17. Section 4. Marking. Section 4 (a): Same as section 3 (a). Section 4 (b): Same as section 3 (b) and in addition repeals sections 2885 and 2886 of the Revised Statutes. See summary explanation, page 18. Section 4 (c): New. See summary explanation, page 18. Section 5. Transportation of lead-bearing and zinc-bearing ores: New. See summary explanation, page 19. Section 6. Repeal of certain obsolete reciprocal provisions: Same as section 4. Section 7. American goods returned: Same as section 5. Section 8. Free entry provision for travelers: Same as section 6 except subsection (e) which is new. See summary explanation, page 20. Section 9. Free entry for noncommercial exhibitions: Same as section 7, except for a drafting change. Section 10. Temporary free entry for samples and other articles under bond. Section 10 (a): Section 8 of H. R. 5505 amended section 308 of the Tariff Act relating to temporary free entry under bond, to permit an extension to 3 years 1 Summary explanation of H. R. 5106, Customs Simplification Act of 1953, issued by Committee on Ways and Means, May 13, 1953. of the original bond period of 6 months. Subsection (a) of the new draft will also permit the extension to 3 years and in addition provides for an original bond period of 1 year instead of 6 months. Section 10 (b): New. See summary explanation, page 21. Section 10 (c): Same as section 8 (b) except that "horses" has been deleted from the amendment of section 308 (5). Horses are now included in subsection (d). Section 10 (d): New. See summary explanation, page 21. Section 10 (e): New. See summary explanation, page 21. Section 10 (f) (g) (h): Drafting changes made necessary by the amendment proposed by subsection (e). Section 11. Supplies and equipment for vessels and aircraft: This section is almost identical with section 9. It has been revised to (1) make it applicable to all vessels of the United States Government (formerly limited to vessels of war); and (2) include supplies and equipment withdrawn from a foreign-trade zone. Section 12. Drawback. Section 12 (a): New. See summary explanation, page 21. Section 12 (b): Similar to section 10 (a) of H. R. 5505 in that it would authorize the refunding of duties in cases where the merchandise upon which the duties have been paid was sent to the consignee without his consent and would extend the period during which the merchandise can be returned to customs custody for exportation from 30 to 90 days. In addition, the new draft would authorize the Secretary to permit additional extension of time where 90 days is insufficient. Section 12 (c): New. See summary explanation, page 22. Section 13. Administrative exemptions: This section is a revision of section 11. The revision would authorize the Secretary of the Treasury to disregard differences of less than $3 between duties or taxes deposited or assessed and the amount of duties actually accruing, as compared with $5 in H. R. 5505. Further, it would permit entry free of duty of (1) $10 of bona fide gifts from persons in foreign countries to persons in the United States; (2) $10 of articles for personal or household use and accompanying persons arriving in the United States who are not entitled to exemptions under paragraph 1798 (c) (2); (3) $3 in any other case. Under H. R. 5505, individuals would have been permitted to bring with them or import by mail up to $10 for their personal use and it would have allowed free entry up to $5 in other cases. Section 14. International traffic and rescue work: Same as section 12. Section 15. Value: This section is almost identical with section 13. Minor language changes of a clarifying nature have been made in the definitions of export value, United States value, comparative value and American selling price. The definition of "freely sold or offered for sale" has been amended to permit sales to exclusive agents and other restricted sales to come within the terms of export value where such limitations do not affect the price. Section 16. Signing and delivery of manifests: Same as section 14. Section 17 (a): Same as subsection (a) of section 15. Section 17 (b): New. See summary explanation, page 23. Section 17 (c): New. See summary explanation, page 23. Section 17 (d) (e): Same as subsections (b) and (c) of section 15. Section 17 (f): New. See summary explanation, page 24. Section 18. Verification of documents: Same as section 16. Section 19. Amendment of entries. Section 19 (a): Same as section 17 (a). Section 19 (b): Differs from section 17 (b) in that it repeals that part of section 489 of the Tariff Act which imposes undervaluation duties on importers. Section 19 (c), (d), (e), (f): Same as subsections (c), (d), (e), and (f) of section 17. Section 20. Commingled merchandise: Same as section 18 except that the period during which the segregation of the merchandise must be accomplished is increased from 20 to 30 days, with authority in the Secretary to grant a longer period. Section 21. Correction of errors and mistakes. Section 21 (a): Same as section 19. Section 21 (b): New. See summary explanation, page 25. Section 22. Conversion of currency: This section in the main is identical with section 20. The changes are (1) in new section 522 (a) reference to the International Monetary Fund and to other international agreements is deleted and the Secretary is directed to maintain a list of par values which he finds are maintained |